TMI Blog2020 (1) TMI 1520X X X X Extracts X X X X X X X X Extracts X X X X ..... ng during the year under consideration and the assessee offered income during the year under consideration and claimed the entire credit during the year - CIT-A deleted the addition - HELD THAT:- CIT(A) has followed relevant provisions of Section 199 of the Act read with Rule 37(BA)(3) of the IT Rules, 1962 which specify that credit of the tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable. In view of the above, we do not find any error in the order of the learned CIT(A) on the issue in dispute - Decided in favour of assessee. - ITA No.3698/Del/2017 - - - Dated:- 31-1-2020 - SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER Applicant by Ms. Rakhi Vimal, Sr.DR Respondent by Shri Salil Aggarwal, Adv. Shri Shailesh Gupta, Adv. ORDER PER O.P. KANT, AM: This appeal by the Revenue is directed against the order dated 24th March, 2017 passed by the learned Commissioner of Income Tax (Appeals)-7, New Delhi [in short the CIT(A) ] for assessment year 2012-13, raising following grounds of appeal: 1. On the facts and under the circumstances of the case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contribution of ₹ 372.82 lakhs. The project was to be completed within two years i.e. from 17.05.2020 to 16.05.2012 from the date of realization of the first installment of the payment by the Central Government. The assessee was released a grant of ₹ 2,75,42,077/- during the financial year 2010-11 and ₹ 5,50,84,155/- during the financial year 2011-12 towards first and second installments of grant. According to the assessee, the grant was for specific project which was to be completed within two years. The assessee recognized the revenue from the grants in the profit and loss account, relying on AS 12 issued by the Institute of Chartered Accountants of India. The assessee realized the revenue from the grants in matching concept of income in ratio of expenditure incurred towards the project and deferred a portion of grant, i.e., ₹ 1,91,00,000 to subsequent year. However, according to the Assessing Officer, the assessee was following mercantile system of accounting and, therefore, the entire grant being revenue in nature, the deferred portion of the grant is taxable in the hands of the assessee for the year under consideration. The learned CIT(A) after consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spent on the objects for which it was meant, save as otherwise provided in this agreement. Any unspent balance and accrued interest there from should be carried forward towards the next year's projected budget. 9. On going through the above clauses, it is to be noted that there is an obligation on the assessee to maintain separate bank account. Further complete record financial year-wise is to be maintained and certified by the Auditors. 10. Clause (k) puts specific obligation on carrying forward the unspent balance with accrued interest to the next year projected budget. 4.6. The Ld. AR has also stated that this method of accounting has been accepted by the AO in the assessment for the A.Y. 2013-14. I have perused the accounting of Government grant by the appellant company, whereby it is consistently recognizing the expenditure incurred for the project against the grant received during the year and offering matching income. The unutilized grant is carried forward to the next year and is reported as deferred revenue grant in the Balance sheet. This accounting treatment is as per the MOU with the Government and also clause 15 of the Accounting Standard AS - 12 prescri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der consideration. However, the assessee offered income of ₹ 5.08 crores during the year under consideration and claimed the entire credit of ₹ 11.56 crores during the year. The Assessing Officer added in income of ₹ 42,02,450/- corresponding the TDS claim of the assessee. The learned CIT(A) though deleted the addition of ₹ 42,02,450/-, however, directed the Assessing Officer to restrict the credit of TDS corresponding to the income offered by the assessee. The relevant finding of the learned CIT(A) is reproduced as under: 5.2. I have carefully considered the assessment order and written submission filed by the Ld. AR. The AO added ₹ 42,04,450/- as the appellant had accounted for receipts of ₹ 5.08 crores against ₹ 5.50 crores as appearing in the 26AS statement and had also claimed credit of TDS of ₹ 11.56 lacs on the receipts. In view of my decision regarding the method of accounting followed by the appellant consistently in para 4.6 of this order and since part of the grant received during the year on which TDS is claimed is deferred to the next year, claim of TDS on the entire grant received during the year is not admissible o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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